ABBOTT OFF THE HOOK, FOR NOW
Abbott Laboratories this month fended off for the second time a 2020 lawsuit from a retirement plan participant whose account was fraudulently raided of $245,000.
The plaintiff, Heide Bartnett, also sued the plan record keeper, Alight Solutions, which has not succeeded in getting the claims against it tossed.
In early 2019, an identity thief began corresponding with the plan’s customer service center and eventually managed to get the bulk of Bartnett’s 401(k) assets transferred to a brand-new bank account, according to court records. Since then, Bartnett has been able to recoup about $108,000.
The plaintiff alleged that Abbott Labs had breached its fiduciary duty by hiring Alight, which at the time was Aon Hewitt’s retirement plan business, retaining the company and allegedly failing to monitor it. Bartnett pointed to other publicly reported instances of retirement accounts at Alight being compromised, as well as an investigation by the Department of Labor.
However, the court noted that the plan sponsored hired the record keeper more than a decade before any such instances occurred. Further, the plan sponsor does have a duty to monitor services providers — but that only applies to its relationship with the plan itself, not with other plans that reported fraudulent distributions, according to the Feb. 8 order to dismiss.
Although the complaint against Abbott was dismissed, the parties are still in discovery, and the plaintiff could later file a second amended complaint. The initial complaint was dismissed and amended last year.
The case is in U.S. District Court for the Northern District of Illinois Eastern Division.
GENENTECH GETS REPRIEVE
Biotech firm Genentech won dismissal Feb. 9 of a class-action lawsuit alleging the company breached its fiduciary duty related to the investment and administrative expenses in its 401(k) plan.
The plaintiff, Matthew Wehner, gave the court an “apples-to-oranges comparison regarding the plan’s fees and funds,” the order dismiss stated. Wehner failed to provide sufficient facts to support the claims, the judge wrote.
However, the plaintiff was granted leave to amend the complaint, so it is unlikely that the case is dead.
The plan, the U.S. Roche 401(k), represented about $7.6 billion in assets among nearly 34,000 participants at the end of 2018, according to court records. The plan included a line of custom target-date funds, which have higher fees and poorer performance records than available off-the-shelf products from companies like Vanguard and Fidelity Investments, according to the complaint. Between 2014 and 2018, administrative fees charged to participants ranged from $57 to $85, which was as much as twice as high as costs charged within plans that have negotiated competitive rates, the plaintiff alleged.
The case is in U.S. District Court in the Northern District of California.
CERNER CORPORATION SETTLES
Health care information technology firm Cerner Corporation on Thursday submitted a $4.05 million settlement agreement to court, seeking to end a roughly year-old lawsuit over it’s plans investment options and record-keeping fees.
Plaintiffs in two separate cases that were recently consolidated sued the company last year, alleging that Cerner failed to consider less expensive investment options for the roughly $2 billion plan.
Along with the monetary aspect of the settlement, Cerner has agreed to issue a request for proposals for record-keeping services. The company will also prohibit its employees within its investment relations division from serving on the retirement plan committee for at least three years.
The case is one of many brought last year by law firm Capozzi Adler, which along with Foulston Siefkin, is seeking to be appointed as class counsel. The law firms intend to request a third of the settlement fund as compensation, or about $1.35 million, court records show.
BLACK ROCK REACHES SETTLEMENT
The investment manager earlier this month tentatively reached a settlement over a 2017 class-action lawsuit brought by participants in its own retirement plan.
The parties filed court documents Feb. 5 indicating a settlement in principal had been reached. The filing did not include any settlement terms, which will be published after a formal agreement is finalized within 30 days.
The plaintiffs have alleged that BlackRock engaged in prohibited transactions by including its own investment products on the $2.7 billion plan’s menu. That included more than a dozen funds and collective investment trusts, including the company’s Lifepath Index target-date series. The plaintiffs alleged the investment options included layered, hidden fees and that the investments performed poorly or mediocrely relative to options available from third parties.
Representing the class in the case are law firms Cohen Milstein Sellers & Toll and Feinberg Jackson Worthman & Wasow.
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As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.